(Daily Caller News Foundation) — The price of shelter increased substantially in October despite topline month-to-month inflation remaining flat, dashing many Americans’ dreams of buying a home, according to The Wall Street Journal.
Inflation decelerated to 3.2% in October, down from 3.7% in September, owing to substantial deflation in the price of energy, but the shelter sector individually had prices increase by 5.5% for the year. Since the beginning of 2021, when President Joe Biden first took office, home prices have risen 29%, rents are up 17% and mortgage rates have neared 8%, according to the WSJ.
“Gasoline and food don’t scare me: I’ll go out to eat less. I’ll buy a moped,” Brian McCusker, a 33-year-old who works in community health, told the WSJ. “Housing is that one thing a lot of people view as the American dream … That first house proves a lot about you as an American adult … My grandparents and my parents both had houses at my age.”
If you were to buy a $1 Million home, you would have to
• Put $200,000 down
• Take on a mortgage of $5,600
• Pay another $1,000 in property taxes, insurance, and maintenance
A grand total of $6,600 per month.
Or you could just rent an identical house for $3,900. pic.twitter.com/F7LIT9w6ft
— Graham Stephan (@GrahamStephan) November 15, 2023
Demand remains strong in the housing market despite the rise in costs, with 17% of households planning to buy a home in the next year, greater than the average of 1% of households in a month that typically buy a home, according to the WSJ. Homeownership rates remain higher than COVID-19 pre-pandemic rates, owing to the cheap market during the pandemic that encouraged a lot of Americans to buy, but that rate will most likely fall as families are unable to afford new homes and the rate attrits.
Mortgage rates reached a 23-year high in October, with the 30-year rate hitting 7.9%, leading to a decline in mortgage applications and reaching its lowest weekly pace since 1995. Mortgage rates have since moderated but remain elevated to around 7.5% following a decline in the rate of Treasury securities, according to the Federal Reserve Bank of St. Louis.
The Federal Reserve has attempted to tame inflation by raising its federal funds rate to a range of 5.25% and 5.50% after a series of 11 rate hikes, bringing the rate to its highest point in 22 years. The high rate is placing upward pressure on the price of Treasuries and, in turn, mortgage rates.
Amid rising prices and high mortgage rates, 85% of consumers in October said it was a bad time to buy a home, the highest in the poll’s history, according to a survey from Fannie Mae. Alternatively, only 37% thought it was a bad time to sell a home.